Good morning, ladies and gentlemen. Welcome to the Third Quarter 2025 Matador Resources Company Earnings Conference Call. My name is Jonathan, and I will be serving as the operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question and answer session at the end of the company's remarks. As a reminder, this conference is being recorded for replay purposes. And the replay will be available on the company's website for one year as in the company's earnings press release issued yesterday. I will now turn the call over to Mr. Mac Schmitz, Senior Vice President, Investor Relations for Matador. Mister Schmitz, you may proceed.

Good morning, everyone, and thank you for joining us for Matador's third quarter 2025 earnings conference call. Some of the presenters today will reference certain non-GAAP financial measures, regularly used by Matador Resources in measuring the company's financial performance. Reconciliations of such non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP are contained at the end of the company's earnings press release. As a reminder, certain statements included in this morning's presentation may be forward-looking and reflect the company's current expectations or forecast of future events based on the information that is now available. Actual results in future events could differ materially from those anticipated in such statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company's earnings release and its most recent annual report on Form 10-K and any subsequent Quarterly reports on Form 10-Q. In addition to our earnings press release yesterday, I would like to remind everyone that you can find a slide presentation in connection with the third quarter 2025 earnings release under the Investor Relations tab on our website. And with that, I would now like to turn the call over to Mr. Joe Foran, our Founder, Chairman and CEO.

Thank you, Mac. It's good to talk to everybody again. We think we've had a fantastic quarter and are really pleased with our progress in all of our different areas. We're particularly excited this quarter because anytime you get to raise the dividend, you generally get a lot of positive feedback from your shareholders, particularly the rank-and-file shareholders. We’re also pleased to have been recognized by the Dallas Morning News as one of the larger companies in the Dallas-Fort Worth area. When you do the calculations, although we are ranked 36th in size, we're number one in profit per employee. So I give a lot of credit to the staff and their contributions. As for capital spending, if I were in the same situation, I would still choose to spend this money just as we did this year. The teams have really worked together on that. The executive committee of the board and the executive committee of the company all went through this thought process not only about this quarter but in setting up next year, which we believe will be one of the most fruitful years we have, as we have lots of inventory, lots of cash flow, and good liquidity. So, ask away. I might turn it over to Chris, our Chief Operating Officer, just to describe some of the thought processes we went through before deciding on this capital structure.

Yeah. Thank you, Joe. This is Chris Calvert, Executive Vice President and Chief Operating Officer. Thank you all for taking the time to be on the call. I’d like to take a few minutes here to highlight the positives from what was written in the release last night surrounding the capital program and focus on three things that I feel may have been overlooked. First, the underlying economics related to the projects that were included in this capital plan. We mentioned 12 additional wells that will be brought into the 2025 program. These wells are expected to achieve more than a 50% rate of return, with half of these fourth-quarter TILs located in Antelope Ridge, which has some of the highest EURs in our company profile. Secondly, I think it is important to mention the advantages and efficiencies that have been realized at the well cost level. We initially guided to a midpoint of $880 per completed lateral foot for 2025 but have since revised that number down to between $835 and $855, with the midpoint at $844. We're expecting to turn on roughly 1,200,000 net lateral feet this year, meaning that $30 to $45 savings equates to about $50,000,000 to $60,000,000 in capital savings. Not only are we activating extremely economic projects, but we're doing it at a lower well cost level, which helps the economics of the wells. Finally, regarding accelerated operations, the 12 wells that we are accelerating into 2025 will put us in a positive position looking into 2026, as we will have 13.6 net wells turned on by January. This provides positive momentum going into 2026 to achieve a 2% to 5% organic growth rate, given what we see as some inorganic growth in 2025. In summary, the underlying economic returns of the project, the reduced costs at the well level, and the positive momentum leading into 2026 lead to a strong report and positive outlook for 2026.

Yeah, and this is Rob, CFO. I wanted to expand on what Chris is discussing. Even though I'm CFO today, I was Chief Accounting Officer for the past ten years and I’ve been sitting here at this table with this management team. We're really proud of what we've accomplished consistently over those past ten years. Just a few metrics: we've gone from an accumulated deficit just three and a half years ago to, for the first time this quarter, over $3,000,000,000 in retained earnings. Our balance sheet is strong, as highlighted on slide 11, with a 0.4 leverage ratio. Over the past year, we've paid down $670,000,000 of our revolving debt and have about $2,000,000,000 in liquidity. This allows us the flexibility to capitalize on what Chris mentioned earlier. We’re really excited about the well returns and results we've achieved so far this year, setting us up for a prosperous 2026. Also, we’ve raised our dividend by 20% this quarter. We’re also continuing to expand our land position with accretive deals when possible. And we have a solid inventory of projects with returns greater than 50%, even at $50 oil as mentioned in the release. We also have an opportunistic share buyback strategy, showing the management team's belief in the company’s future. Overall, we've successfully achieved all our priorities this quarter, and I echo Joe's sentiments about what a great quarter it has been. We're excited about what lies ahead.

To q and a. All right. Thank you. If your question has been answered and you'd like to remove yourself from the queue, simply press... We would ask that you please limit yourself to one question until all have had a chance to ask a question after which we would welcome any additional follow-up questions. One moment for our first question.

Good morning, guys. Nice to see another solid quarter and upbeat outlook. Joe, my question is really for you or Chris and the team. Just regarding operational efficiency, something you were addressing about capital spending. I'm just curious, as you continue to see the improvement in efficiency, how do you all decide between potentially continuing with the same capital spend for an increase in production growth or perhaps continuing with the same production while decreasing capital spend? Is it one or the other, or how do you make that decision from a higher level? Thank you.

Neal, thanks for the question. That's a good question. I wish I could provide an easy, always answer. It's a balance between those two areas, taking into account several other factors. It’s not just one variable. It’s not simply about whether oil prices are up or down. We've often made more money during downturns than during booming times by taking on projects when others are sidelined. For instance, when we acquired the Rodney Robinson lease during low prices, it paid off big time. Likewise, our long-standing rig relationships have given us a competitive edge. Our discussions on capital spending are lively and thorough, weighing multiple variables, including oil price, well quality, and opportunity costs. Our geologists have done excellent work, contributing to rich data reflected in our reserve studies. Overall, spending decisions are made considering broader factors and discussions, from the midstream to marketing, to ensure we’re making wise investments.

Yeah. Neil, this is Chris Calvert again. Joe made an excellent point. When we look at specific project returns, we have multiple factors to consider. The back half of this year showed some dislocation in costs, which we can capitalize on. The efficiencies we have achieved are significant, and we can utilize competitive service pricing. We’re in a position to adjust our projects based on market conditions and maintain optionality. As we approach February and get a clearer picture of 2026, we’ll refine our strategies accordingly.

Good morning, Joe and team, and thanks for taking my question. Perhaps leaning into the efficiency gains highlighted this quarter, where do you see the greatest opportunities for continued efficiency gains? More broadly, how much of your recent projected gains have been factored into your guidance for 2026?

Yeah, Derrick. This is Chris Calvert again. From an efficiency standpoint, we believe there is always room for improvement. We currently utilize trimming and tri-modal fracs on about 80% to 85% of our wells. We're looking to increase that number even further in 2026. We are also exploring partnerships to enhance our efficiency in handling produced water. On the drilling side, we’re excited to implement longer laterals, enhancing our productivity. Increased efficiency will contribute positively to our capital budgets, allowing us to do more with less capital moving forward.

Hey guys, I want to continue on the same point. You clearly have flexibility in your plans, which you discussed. I wanted to understand the variables you’re monitoring, especially as expectations suggest an oversupply of oil in 2026. How much does the macro oil landscape factor into your planning? If oil prices decline further, is there a threshold where you’d reconsider your growth strategy?

Hey Leo. That’s a great question. As we step into February, if commodity prices continue to slide, we will reassess our plans. Joe mentioned our internal discussions where multiple teams weigh in, considering various factors. What’s critical is our flexibility; we can adjust our operations based on evolving conditions, weighing production growth decisions against other needs.

Chris, good points. But I believe it’s essential to stress that efficiency can offset decreased oil prices. If we drill wells more quickly, we save substantial costs that help our rate of return. Furthermore, the advancements in our rig operations have contributed to our competitive edge. Evaluating well quality and capital efficiency is key. We don’t purely focus on oil prices; we also factor in operational constraints and efficiencies. So, while prices may fluctuate, strategically managing our operations is what matters.

I think Joe's points resonate well. Our midstream business continues to perform well. We hit a new processing record last quarter, processing 533,000,000 cubic feet per day of natural gas. We're exploring options to better capture the value of the midstream, and enhancing our services sets us apart from competitors.

Just to emphasize the midstream business, we operate on a fee-based model, meaning we are insulated from commodity price fluctuations. We have good relationships with our clients, which provides stability. Our flow assurance capabilities and reliable service help us stand out in the marketplace.

The partnership with Matador is vital. As Matador grows, we see corresponding growth in our midstream operations. Next year’s capital expenditures are geared towards future growth, and we have robust projects lined up.

Good morning, everyone. For my question, I’d like to ask about water handling. We've seen activity levels in that sector rise. Given how San Mateo is involved in water handling, could you discuss its growth outlook?

Noah, let me start from the Matador side, and Brian can follow up. Next year, we will focus on approximately $40,000,000 to $50,000,000 in investment towards our wholly owned midstream business. This includes expansion of our water gathering system to enhance our handling capabilities, as our operations progress.

Thank you for taking my question. I’m curious about gas pricing. We noticed negative pricing trends recently, and I’d like to know your outlook for natural gas pricing, especially considering additional takeaway capacities and the potential implications on your realizations.

Jon, I'll start, and others may want to chime in. In Q4, we decided to curtail some wells during maintenance to avoid negative Waha pricing. We saved significantly in costs through these decisions. For long-term solutions, we anticipate that pipelines set to come online will ease pricing concerns and allow for increased production.

There’s also the seasonal influence on gas pricing. We’ve positioned ourselves well with hedges to protect against downside risks. New pipelines will alleviate concerns around Waha prices, aiding our production levels in the upcoming years. As we approach 2026, we see a bright outlook for gas production with the return of strong market conditions.

Thanks for taking my question. I want to discuss well productivity. I’ve observed that your well productivity on a per lateral foot basis has declined slightly year-over-year. Can you share your expectations for well productivity and trends into 2026?

Hey, Zach. Going into 2026, we expect strong program results, aiming for similar or improved EUR per foot metrics compared to 2025. We anticipate a 10% increase in lateral lengths, which should positively impact total EURs. Our inventory is robust with high-quality wells, and we’re excited about our trajectory.

Good morning, thanks for taking my question. I want to touch on the midstream aspect. What impact do you expect increased activity to have on San Mateo's volumes and EBITDA outlook?

The partnership we have with Matador is critical; around 70% to 80% of our revenues come from Matador. As Matador grows, we'll likely see growth at San Mateo as well. Looking ahead, we have several projects in the pipeline, and we’re eager to continue expanding.

Thank you very much, and thanks to everyone for spending the time with us. We pride ourselves on our communication and accessibility. You’ll find that we’re responsibly managing capital spending and growing from a deficit to over $3,000,000,000 in retained earnings. Our executive team has not sold a single share, and we foster a high participation rate for employee stock purchases. We value the quality of our operations more than fleeting oil prices. I encourage everyone to visit us, meet our team, and see how we operate. We’ve seen considerable growth over the past forty years, and we’re optimistic about our future prospects.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.